Correlation Between Fidelity Covington and Fidelity Crypto

Can any of the company-specific risk be diversified away by investing in both Fidelity Covington and Fidelity Crypto at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fidelity Covington and Fidelity Crypto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Covington Trust and Fidelity Crypto Industry, you can compare the effects of market volatilities on Fidelity Covington and Fidelity Crypto and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fidelity Covington with a short position of Fidelity Crypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Covington and Fidelity Crypto.

Diversification Opportunities for Fidelity Covington and Fidelity Crypto

0.6

Correlation Coefficient

Fidelity Covington  Fidelity Crypto

Poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Covington Trust and Fidelity Crypto Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Crypto Industry and Fidelity Covington is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fidelity Covington Trust are associated (or correlated) with Fidelity Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Crypto Industry has no effect on the direction of Fidelity Covington i.e., Fidelity Covington and Fidelity Crypto go up and down completely randomly.

Pair Corralation between Fidelity Covington and Fidelity Crypto

Given the investment horizon of 90 days Fidelity Covington Trust is expected to generate 0.43 times more return on investment than Fidelity Crypto. However, Fidelity Covington Trust is 2.33 times less risky than Fidelity Crypto. It trades about -0.11 of its potential returns per unit of risk. Fidelity Crypto Industry is currently generating about -0.12 per unit of risk. If you would invest  1,481  in Fidelity Covington Trust on December 2, 2024 and sell it today you would lose (157.00) from holding Fidelity Covington Trust or give up 10.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fidelity Covington Trust  vs.  Fidelity Crypto Industry

Fidelity Covington Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Covington Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Fidelity Crypto Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Crypto Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's forward indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Pair Trading with Fidelity Covington and Fidelity Crypto

The main advantage of trading using opposite Fidelity Covington and Fidelity Crypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Covington position performs unexpectedly, Fidelity Crypto can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fidelity Crypto will offset losses from the drop in Fidelity Crypto's long position.

The idea behind Fidelity Covington Trust and Fidelity Crypto Industry pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.